Recent Price Trends

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Recent Price Trends

Many
larger magazines, newsletters and online publications plan their topics months
in advance. This will help the writers and editors prepare material well in advance, but in many
instances will make it difficult to always offer the most timely articles. One of the advantages
of having a smaller publication is that the topics can be prepared a week or days in advance,
so topics can be very timely.

There probably is not more of a timely issue right now than the current continued increase in
soy wax prices, coupled with the continuing trend of paraffin wax increases.
Unfortunately, the trend for paraffin wax has been ongoing on close to three
(3) years and for the recent soy market about four to six months. In this
issue we will focus on some of the reasons these price increases are occurring
and why it may be necessary to follow some of the larger economic issues.

It
is amazing how often you can read USA Today and one of the feature stories
will indirectly have an impact on the candle business. Several weeks ago
their front page article featured how prices of wheat, soy and other crops
have skyrocketed and how much this has impacted food prices and essential
household items. In some instances, there have been some extreme measures
taken. According to USA Today, Pakistan is stockpiling wheat and using its
military to guard flour mills. In other places the result has been continued
price increases on food prices to the extent that riots have occurred.

The reality of it is that the candle industry is also getting hit very hard, because of these
increases. While candles are not as critical as food, for many companies
and individuals it is their sole income. The timing could not have been worse in
that a growing trend had some companies switching from paraffin
based products to soy and other natural based products to take advantage
of the favorable pricing soy once offered. However, in recent months, soy
has soared to where in some instances they are 25 to 30% higher
than paraffin based products. Some might point out that the continued increase
in popularity of soy contributed to this, but reality of it is that soy candles
have had very little, if any impact on this upward movement of soy prices.
Right now, depending on the source, it has been identified that only 2 to
6% of the soy processed goes into the candle market, the far greater usage
is in foods.

The current increase in price is more of economics 101; the demand for the product is not nearly
keeping pace with the availability. The price of soy is always determined based on the market
commodity pricing. During the first quarter of 2008, by many accounts, the demand for soy would
increase dramatically in 2008 and the availability would be down thus the tremendous shift up
in pricing. The forecasted demand came as a result of the continuing trend to alternative fuels
and now the anticipated rapidly need of soy and other products grown in China. The good news if
any has been the last couple of weeks the “futures” on soy have been declining slightly.
We do use the term slightly very cautiously in that it may only be a temporary situation if the
demand suddenly increases, or the ability to grow the forecasted crop decreases it could go up
very rapidly again.

It is very difficult to determine how to proceed in a market like this. The general suggestion
is that when a price seems to be where you need it to be, purchase more than you may need to avoid
future increases. Follow the market and always try to take advantage of soy pricing when possible.

The other development in the candle industry regarding paraffin waxes has actually been going
on for a number of years and continues to evolve and change almost annually. For many years wax
was treated at refineries as a by-product of the refining process and was priced accordingly.
In most instances the operators of refineries focused on revenues from fuels and higher end products
in the process and were satisfied, in most instances, with just minimal cost on selling the waxes.
As technology was developed to convert more of the crude to fuel and other products, less wax
was produced.

Many refineries that did not employ this type of technology started to treat wax as a raw material
and not a by-product. In addition the refineries making wax also continued to decline. According
to the National Petrochemical & Refineries Association, the number of refineries operating
wax facilities declined from 25 in 1993 vs. now in the range of 10. Among those 10 many don’t
even focus on the candle industry. This has greatly contributed to the current availability of
waxes in the US. The final contributing factor, without doubt, is the cost of the crude oil. This
impacts prices in several ways including, but not limited to, the transportation cost of getting
the crude oil to the refineries, operating the refineries and then the distribution of the finished
product.

While all of these factors may seem overwhelming, the key is continuing to keep your eye on
all costs and be sure to determine this when pricing out your candles. Naturally, the biggest
impact is going to be in larger candles, the votives and smaller price increases, while not always
pleasant, do not impact the cost as much as other potential raw materials.

The candle market is always going to be a strong one due to its continued popularity and efforts
of candle makers, producers and suppliers to continue to develop new and
interesting products to ensure that growth and popularity continues.

With current increase in the mainstream materials it is imperative to look at everything
you do. There are many techniques for increasing profit margin on your candles, but none are
as inexpensive as the three Rs- reduce, recycle and reuse. These simple actions cost the candle
maker nothing and actually help the environment at the same time.

Reduce – In order to save money on many different levels, reduce the amount of trash you
accumulate by looking at your orders over the year and trying to buy larger sizes of commonly
used items. For instance, why pay the higher price for a yearly usage of eight, 4oz bottles of
scent/color when you could save money and produce less waste by purchasing two, 16oz bottles.
The benefits also include less ordering cost, more efficient shipping charges, lower price per
unit and guarantee you have the materials on hand when needed.

Recycle – To protect your supplies during shipping, we must use packing materials to be sure your
products arrive to you in perfect condition. Candlewic’s air pillows used in packing, as well as
plastic scent bottles, are suitable for most recycle programs that accept plastic. Since reusing is also
recycling, we highly encourage the candle maker to reuse the packing materials and boxes to reship finished
goods, or even cut the cartons apart to use on the floor to absorb spilled wax.

Reuse – Once again, reusing an item is recycling, so please reuse any packing material you can.
The boxes and packing materials are sturdy enough to get repeated uses, which reduce the cost of shipping
your final product. Most candle makers will reship finished jar candles in the original cartons the jars
were received in.

Other Frequently Asked Questions

Q: What does the scent load refer to?A: This is the amount of fragrance that is placed into the candle maker’s
formulation in relation to the entire batch size. In most instances this will range from 3% up
to 8%, with the average being about 5%. In measuring this, a 5% scent load equals about 1 ounce
of fragrance for each 1 pound of wax used (additives and everything included).

Q: How do I get rid of air bubbles in the gel?A: When using the Penreco
gel there is no way to totally eliminate the air bubbles, but to reduce them you can initiate
some of the following steps: 1.) Raise the pouring temperature of the gel. 2.) Allow the gel
to remain at the higher temperature for a little longer to allow the air bubbles to gravitate
out of the candle. 3.) Slowly warm the candle after it has set up.

April 2008

Aluminum Molds
To Each
Their Own

Aluminum
molds for making freestanding candles are a great investment as an inexpensive way to
extend your line of candles. Jars have become so popular
in recent years, that many candle makers have forgotten that pillar candles add a real touch
of beauty to any home’s décor.
Pillar candles offer extremely vibrant colors due to the
fact there is no glass blocking the true color of the candle as seen with the naked eye. The
profit margin on pillar candles may be higher, because the price of the glass is removed from
the cost of raw materials. Aluminum does not rust, so you can enjoy your molds for many years.

There are two wicking techniques that are most commonly employed
when using aluminum molds. You can use the traditional method or the pillar pin method. Both
techniques work well depending on the volume of candles produced or the amount of labor available.

The traditional method involves the mold, raw
wicking on a spool, a wick
bar and a rubber
plug. This method is best for lower volume production or in the instance when you want
to leave a little length of wick on the candle to attach a bead or a tag. You simply thread
the wick through the mold and place a rubber plug into the small hole to hold the wick in place.
Place a wick bar across the large opening of the mold and wrap the wick around the bar and
pour the wax. After the wax has cooled, the finished product will have the wick nicely centered
down the middle of the candle.

The pillar pin method involves a round mold, a pillar
pin and a pre-wick
assembly. This method is better suited for the small to large production run. Basically,
you are making a candle with no wick and inserting a wick after it cools. There are two ways
to use the pin. You can either stick the disc part of the pin down into the mold or stick the
pin up through the mold from the outside bottom. Pour the wax and let cool. When you are done,
you will have a candle with a hole through the center core and no wick. Take a wick assembly
and insert up through the hole and you are done. The wick will be perfectly centered. The pillar
pins are only suited for the round aluminum molds.

When using aluminum molds, there are a few tips and techniques
that will help you regardless of the method you use.

1. Take good care of your molds. Do not use them for any other
use such as a penholder or thermometer holder because you may
scratch the inside, which will be apparent on the finished candle.

2. By heating or cooling the mold you can achieve different aesthetic
qualities to the finished mold. Cold molds give a primitive appearance,
while warm molds may give a good gloss.

3. Keep molds level unless a desired layered appearance is trying
to be obtained. By resting the mold on various angles, some neat
stripes can be achieved.

4. Take careful note on the pour temperatures. By adjusting the
temperature you can control the shrinkage. Pouring too hot produces
more shrinkage and may involve more topping off, while pouring
too cool may not give you enough shrinkage therefore making it
difficult to remove the mold.

5. For making perfect bottoms on your pillars, Candlewic highly
recommends using a heated
base leveler and angle
plate for perfectly level pillars every time.

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Hard to believe we are almost to the end of 2008. We wish to thank all of our customers for their continued support in 2008. We look forward to the opportunity of working with you in 2009 as we start our 37th year in business we look forward to facing the challenges of the industry.

While doing some recent research, I came across a list of the most annoying “Business Cliches” used in today’s business environment. Number one on this list was "Think outside the Box". After reading enough business journals and speaking with various business people, I would have to agree with this conclusion. It would appear odd to start this article with such an overused/annoying phrase and I will avoid the temptation to do it, but the reference can be used.

On behalf of the Candlewic Company, we wish to thank everyone that takes the time to read our newsletter on a regular basis. It is always fun sharing our passion of candle making with others that have this same enthusiasm. Candlewic has been in business for over 38 years and continues to learn from our customers on a regular basis so be sure to keep in touch with us and be sure to share with your candle community our newsletter and other resources we offer.